At RealClearPolitics Bill Briggs argues that the Payroll Protection Program worked:
But did the Paycheck Protection Program deliver on its promise? The evidence reveals that it did — and in more ways than most realize.
As the economy shut down a year ago, there were dire warnings of unemployment rates exceeding 20%, perhaps even 30%. Department of Labor data from March 2020 to April 2020 shows unemployment quickly surging from 4.4% to a COVID-era peak of 14.8% before steadily receding over subsequent months.
[…]
Any clear-eyed assessment of these efforts would recognize that the program wasn’t perfect, as no government program that had to be set up in under a week and distribute over $700 billion could be. However, recent academic studies have suggested that the program was inefficient, even unnecessary. However, much of that snapshot analysis examined just the past year.
Here’s another scenario to consider: As noted above, DOL data reveals that PPP and other measures stemmed economic freefall. Economists and other experts didn’t consider how these programs prevented “deaths of despair†over a longer time horizon. Such horrific events have many contributing factors, but job loss and economic dislocation are all too often the trigger.
Some studies suggest that the opioid epidemic accelerated on the heels of the Great Recession. Humans innately understand how economic hardship can lead to despair: a person loses their job along with their employer-supported health care, then eventually gets hurt or sick, is unable to access proper care, and ultimately becomes addicted to deadly opioids in just a few short years.
The true value and lasting legacies of PPP and other COVID relief programs will rest on their mitigation of both economic and human tolls over time.
It’ll only become clearer over time that the Paycheck Protection Program averted mass unemployment and restored calm to both labor and small business markets while balancing the need for nationwide social distancing. These measures prevented a death toll with a longer tail that could have amounted to millions more deaths over several years.
I have no strongly held views of the efficacy of the PPP one way or another but I would say he’s arguing the wrong thing. We should be doing a cost-benefit analysis rather than just a benefit analysis and I honestly don’t know how the program would fare under such scrutiny. I do know that there was a substantial amount of fraud involved in the disbursement of funds, some intentional, some not.
I also think that we should avoid what I think of as “the masterstroke phenomenon”. While a PPP that operated over an even shorter period might have been worthwhile, it’s equally possible that the desire to solve the problem with a single “masterstroke” may have increased the costs while reducing the effectiveness of the program.
As Mr. Briggs suggest, I think the PPP should be assessed with clear eyes and that means considering other alternatives and reckoning the costs while tallying the benefits.
As I was reading his piece I was thinking just what you observed about cost benefit. And even further, causation with the overwrought response.
It never ceases to amaze me how government can cause or contribute to a problem, and then turn around and congratulate itself for passing some legislation to “fix” the problem they caused.
“I have no strongly held views of the efficacy of the PPP one way or another…â€
I can only offer that our personal experience is that its very situational. We have a company located in FL that manufactures construction related products for residential housing. Between the general blue state exodus, COVID related work at home, COVID related “get me out of this horrible state, and low interest rate environment, this company is on fire. Naturally, we didn’t even think of applying for PPP loans.
Now imagine another company that supplies electrical and electronic components to the commercial aerospace industry. It went from a pre-COVID record year to fighting for its life in the period of a few months.
PPP loans were applied for and received, and were instrumental in bridging to recovery, which is underway.
Was fraud in the program? It’s a government program. You get three guesses. Was some unintentional? You bet. The rules and the paperwork require a Philadelphia lawyer to work through.
On balance how fair or efficacious was the whole thing? I don’t know. Ive heard success stories and horror stories. I do know, as you pointed out, that a more modulated and balanced approach would have been better. What we had was a panicked (and scheming) political class and an advising medical community running around like chickens with their heads cut off determined to do something, anything, NOW, and the result was a PPP program as hamfisted and other policy responses.
The problem was caused by the virus. Every country regardless of approach had a financial hit.
“an advising medical community running around like chickens with their heads cut off determined to do something, anything, NOW, and the result was a PPP program”
Really? We docs get to set financial policy? OK, Medicare payments are going way up. Thanks bro!
As to the topic, an awful lot of small businesses in our area benefited. Lunch with our accountant (big firm does lots of accounts locally) and she thought it was life saving for a lot of them. For us, we would have had to lay off 1/3 of our staff and it let us keep everyone paid. The paperwork was awful and the paperwork isn’t done. I am still signing stuff for PPP. At this point I have to think the uncertainty about loan forgiveness would become a negative.
Steve
“The problem was caused by the virus. Every country regardless of approach had a financial hit.”
Viruses come and go. They are a fact of life. Viruses of similar health consequence occurred in the late 50’s and 60’s. Its the policy responses that were different. In one we had Woodstock. In the latest we shut down the economy. And we got precious little for it.
“Really? We docs get to set financial policy?”
Perhaps you haven’t heard of a certain A. Fauci. He is a fascinating guy, I must admit. Changes his point of view almost on a weekly basis.
” Viruses of similar health consequence occurred in the late 50’s and 60’s”
No we didnt. Not even remotely close. In the 50s and 60s a lot of hospitals didnt even really have an ICU. There were no antiviral drugs. Ventilators were pretty primitive. We had not invented the MRI, no CT scan, no Hi-Flo oxygen or Bi-Pap. No pulse oximetry or capnometry. You got sick, you died. All of those pts who spent 2-3 weeks on a vent and lived? Almost all would be dead. Heck, when I started medicine in the 70s almost none of those would have lived. The fatality rate was about twice what it is now for the first 2-3 months, and that was with 2020 medicine. Go back to the golf course.
Fauci set policy? Really? He wasn’t the POTUS was he? What we needed was a POTUS with management and leadership skills. Someone with the smarts, experience and maybe even balls to listen to all of his experts and then decide what to do for the good of the country, not for his re-election effort.
Steve
You’re right, steve. The case mortality rate for the 1958-1959 pandemic was significantly higher than for COVID-19, possibly for the reasons you mention. The case mortality for the 1968 pandemic was lower. I’m honestly not sure what the point is.
People just don’t realize how much medicine has changed. I like to point out that the richest family in the world in the 60s had a baby born just a five weeks premature die. Covid is a much worse disease than what we saw in those two earlier epidemics.
Steve
I’m honestly not sure how you’d go about doing an apples-to-apples comparison. You could be right; or it could be that the life expectancy tables are misleading. What if the people over 55 who died of COVID-19 or a large fraction of them were being kept alive precariously by modern medicine? It could actually be the case that the “Asian flu” of 1958-1959 was more virulent than COVID-19 rather than less. I doubt the records are even available to make the assessment.